Does Burial Insurance Have Cash Value?
Cash value is something that is very important, sometimes more important, than the life insurance itself!
So does burial insurance have cash value?
Yes, it does.
However, when talking about burial insurance, cash value is most certainly not the main focus or goal of the coverage. Nevertheless, it most certainly does have cash value.
This article will explain the ins and outs of cash value so that you have more of an understanding of what the cash value actually looks like with a Burial Insurance Policy.
Let’s get started!
Table of Contents
What is Cash Value?
The first thing that we need to do is have an understanding of what exactly cash value is.
Cash value, put simply, is somewhat like a savings account that is built in to the policy.
As you pay on the policy, it starts to grow and build each year. As you can imagine, the more that is put into a policy, the faster the policy grows Cash Value, or CV as it is often referred.
The cash value is there for whatever you like. It is yours to take a loan out from, or it can even be designed to pay for policy payments.
The thing to remember here is if you dip into the cash value, it is considered a loan. Meaning if you don’t pay it back to the policy, it will take away from your death benefit.
For example, if you have $10,000 in death benefit, and build up cash value of $1,000 and take a loan out for the full $1,000, if it is not paid back your beneficiary will only receive $9,000. Most people don’t know this, and are very much shined on by things they see on the internet about how great Cash Value is. Which it definitely is, but for the right circumstance.
Burial insurance is not one of those circumstances in my opinion.
What is Burial Insurance?
Now that we know what exactly cash value is, it’s important to know what burial insurance is!
Burial insurance is another name for what the product really is. Just like Final Expense, these words represent a type of Whole Life insurance policy. The reason why we refer to it as burial insurance or Final Expense is due to how the policy is designed or structured.
For example, with traditional whole life plans, you can get large amounts of coverage well into the 6 and 7 figure range. That is definitely not the case with a Burial insurance policy.
With final expense or burial insurance, we are looking at policies covering amounts of $1,500 up to $40,000. Pretty big difference right?
These policies have the same features of a whole life policy in the fact that they last your entire life, they do grow cash value, and the policy can’t be terminated by the carrier for any reason other than lack of payment.
The underwriting is also very different for burial insurance policies. It is what is called “Simplified Issue”. This means there are no medical exams or hoops that you have to jump through in order to get the coverage. It is very fast, and efficient!
You simply complete the application with the carrier that is best for you, which is what I do at Arkburialinsurance.com, the carrier verifies your information and does a prescription check to verify you are as healthy as you say. Once this is done and everything checks out, the first payment is taken when you decide, and the policy is issued.
It’s that simple!
That is why we distinguish the difference between “whole life” and “burial insurance or Final Expense”.
Cash Value in Burial Insurance Policies
Actual burial policies, like those offered here at Arkburialinsurance.com, there is a cash value element to the policy.
As I mentioned before, it is not priority for these types of policies like it is for policies like Indexed Universal Life (IUL), Universal Life (UL), or Participating Whole Life plans. The reason being is that premiums and face amounts are typically relatively low.
Typically burial insurance policies are covering amounts anywhere from $1,500 up to $40,000. Payments are decided based on your age, health, and gender, but you can find out what you can expect to pay by getting yourself a free quote here.
I will also list a table showing rates for $10,000 in coverage for a few ages.
The main priority in burial insurance policies is the death benefit. This is the amount that is going to be paid to your beneficiary when you pass away. Most clients that are looking for burial insurance are not looking for a vehicle that will allow them to take a loan out of, but instead take care of their families.
There is no right or wrong either way, I help my clients no matter what their goals are. With that being said, my clients that need burial insurance, my specialty, are not planning on having a big cash value policy.
Burial Insurance Rates (2023)
Should I Get Burial Insurance for Cash Value
There is no doubt cash value is a nice perk for getting Life insurance, even burial insurance.
With that being said, I do not recommend people who are looking for a big cash value element to their policy to plan on the burial policy providing that for them. It is simply not what it is designed to do.
Burial insurance is designed for people to get great coverage very fast. The main goal is to protect their loved ones or beneficiaries.
Can I Use Cash Value with Burial Insurance?
It is most certainly an option to use the cash value that is built up in your Burial Insurance policy. It is there for you to do what you like with!
While it is available, I do not recommend it and I will explain why.
The downside to using cash value is that it eats away at the benefit amount. This is why I don’t recommend it for my clients that have Burial Insurance.
These policies are smaller benefit amounts already, we definitely don’t want to cut into that and have our loved ones or whoever our beneficiary is hurting because of it.
It is not a fun conversation to have when a beneficiary is expecting a much larger check than the one they receive due to an outstanding loan from the cash value of the policy.
The most important thing of all is to get the insurance in place first.
It takes several years before the Cash Value is built high enough to even show benefit. That is true with all policies for the most part, and certainly true for Burial Insurance policies.
We can’t run before we can walk, so first things first is to get the right policy that is perfect for us in place.
Lucky for you, I specialize in exactly that! I am so honored to be a professional when it comes to getting people the absolute best burial insurance policies for their specific situation. I personally tailor these policies to fit the needs of my wonderful clients.
Get yourself a free quote and see what we can do!
As always, leave your questions and comments for me down below! I look forward to serving you and your family.